Analysis & Opinion

TOKYO Nov 27 (Reuters) - Japan's ruling Democrats cast
themselves on Tuesday as the voice of reason on diplomacy and
the economy as they headed for a general election, highlighting
a contrast with the hawkish rhetoric and aggressive monetary
policy recipes of their rivals.

Prime Minister Yoshihiko Noda and his party vowed to defend
national interests, including a chain of rocky East China Sea
islets controlled by Japan but also claimed by China and Taiwan,
but would do so with diplomacy and "responsible defence."

"There are issues concerning sovereignty, territories and
territorial waters, but we must adhere to the peaceful path we
have followed since World War Two," Noda told journalists while
unveiling the manifesto for the Dec. 16 general
election.

"At the same time, we must respond in a cool-headed,
practical and strategic manner."

Noda's Democrats trail the opposition Liberal Democratic
Party (LDP), whose leader Shinzo Abe, 58, stole the thunder
early on with promises to stand up to Beijing and calls for
"unlimited" monetary stimulus from the central bank.

Abe, who hopes to return to the prime minister's post he
quit in 2007 after just one year on office, has called for
reversing a long decline in Japan's defence spending and changes
in its pacifist constitution to allow its military to play a
more active role.

He also wants the Bank of Japan to agree with the government
on an inflation target. Despite criticism that this could
infringe on central bank independence, Abe repeated his call on
Tuesday.

"The 1 percent 'goal' already announced by the bank won't
do. It must instead be a 'target' of 2 percent," Abe told a
symposium on Japan's growth strategy.

While commenting on tensions with Beijing that flared up in
September after Japan bought the disputed islands from their
private owners, Abe stressed the importance of ties with China.
But he also said: "China shouldn't attack Japanese companies,
boycott our products or do other things that break rules, for
the purpose of achieving its political goals."

"China is doing just that and if Japan yields to that, it
will just keep on doing so," he said. "We need to tell China
that it cannot break the rules."

Noda has warned that Abe's foreign and economic policy ideas
could backfire.

Appearing on a TV show on Sunday, Noda said Abe's plan to
deploy personnel on the uninhabited islands risked further
escalating tensions with Beijing while his thinking on monetary
policy was "dangerous", raising questions about central bank
independence.

For its part, Noda's party echoed the LDP's vow to battle
the deflation that has plagued the world's third-largest economy
for nearly two decades hand in hand with the central bank, but
stopped short of mentioning any targets or suggesting changes to
the central bank law, as their rivals have.

NUCLEAR POWER

The Democrats also reiterated their goal of phasing out
nuclear power by the 2030s following last year's Fukushima
radiation disaster, another contrast with the LDP.

The Liberal Democrats advocate more debate before deciding
on Japan's energy mix and Noda pointed out that his party was
more in tune with public opinion.

"The feeling of the people after last year's nuclear
disaster is not to rely on nuclear power in the future, to make
the future one without nuclear power," he said.

"Based on that view, we decided on the broad policy to
mobilise all policy resources to aim at zero nuclear power
generation by the 2030s. I want to move forward steadily with
that policy without wavering."

But while analysts noted the deliberate tone of the ruling
party's message, some were sceptical whether it would be enough
to change their fortunes.

"They may be the calm voice of reason but they have proven
themselves to be unable to govern effectively," said Jesper
Koll, head of equity research at JP Morgan in Tokyo. "In my view
the Democrats have done a lot of good things but they were not
able to market themselves as the party of leadership."

The LDP leads in opinion polls with 22-25 percent of voters
saying they will cast their ballots for the once-dominant party.
That is about 10-15 points ahead of the Democrats, who have
struggled to close the gap since Noda called for the snap
election earlier this month.

The Democrats swept to power in 2009 promising to change how
the country is run after more than half a century of nearly
non-stop LDP rule characterised by cosy ties between the
powerful bureaucracy, big business and ruling party lawmakers.
But support for the Democrats has plummeted since then due to
policy flip-flops and internal bickering.